Energy: 23,000 jobs at risk: offshore crisis hits German industry

New figures show how expensive the stalled expansion of offshore wind power could be for Germany. Billions in added value are at risk, and the first suppliers are already cutting jobs.

Wind farm in the North Sea: The offshore industry complains about empty order books. Photo: dpa

The offshore wind industry in Germany is facing massive losses: up to 23,000 of the 49,000 jobs could be lost in just four years if expansion continues to stall.

Project developers expect job cuts due to increased costs, high interest rates and delayed tenders for offshore projects.

The federal government is revising the offshore wind energy law; The industry criticizes the current draft.

Some suppliers are already announcing layoffs and short-time work.

The summary was created and editorially checked using AI.

Dusseldorf. Not a single new offshore wind farm has been launched in Germany for two years. Postponed tenders, delayed grid connections and uncertain projects: The order books of many suppliers are empty - and that could be just the beginning.

New figures show the extent of the crisis facing the offshore wind industry in Germany: 23,000 of the current 49,000 jobs could be lost in the next four years if expansion continues to stall. In the same period, the loss of sales would amount to 24 billion euros, also because a large part of the added value would then move abroad.

This is the result of a new analysis by the market research company wind:research on behalf of the Federal Wind Energy Association (BWO).

Billion-dollar orders at risk

“If nothing happens in the next few months, we will see a situation like that in the solar industry,” warns Siemens Energy CEO Vinod Philip in an interview with Handelsblatt. Siemens Energy will also have to cut jobs if the crisis is not averted, said the head of the wind division: “And not in small numbers.” Siemens Energy is one of the largest wind turbine manufacturers in the world.

The reason for the existential crisis is a dangerous mix of increased costs, high interest rates and political conditions. Projects with at least 16 gigawatts of output are on the brink, tenders have been postponed or have no bids at all. Suppliers such as the turbine manufacturers Siemens Energy and Vestas are threatened with losing orders worth billions.

Wind power

Impending offshore crisis becomes a stress test for Siemens Energy

Wind energy on the high seas should become one of the main pillars of German electricity supply. Offshore systems reliably deliver a lot of electricity and are considered an important component for supplying industry.

The political ambitions are correspondingly great: by 2030, the installed capacity is expected to rise to 30 gigawatts (GW), and by 2045 it is expected to more than double again. But there is a significant gap between political goals and what is actually being built: 10.8 GW is currently installed.

Auctions with surreal results

Only in January, Economics Minister Katherina Reiche (CDU) emphasized the importance of the offshore industry at a summit of the North Sea states in Hamburg: “Our goal is to develop the largest energy hub in the world.”

A leading manager from the industry criticizes: "The industry has invested almost 15 billion to expand the supply chain. But what we are currently seeing is that from 2028 50 to 60 percent less will be built than planned." And Germany is responsible for a large part of this gap.

In Germany, areas for the construction of marine parks are awarded through government tenders. In recent years, developers such as RWE, Vattenfall and EnBW have not only had to get by without funding, but have even had to offer the state billions for the contract in the face of tough competition.

Siemens Energy board member Vinod Philip: “If nothing happens in the next few months, we will see a situation like in the solar industry.” Photo: Siemens

The two oil and gas companies BP and Total Energies alone had offered a total of 12.6 billion euros in bidding processes in 2023 for the contract for offshore areas. It was worth a total of 16.6 billion euros for project developers to win the contract for wind farm areas in the North and Baltic Seas between 2023 and 2025.

Even back then, industry insiders doubted whether the wind farms could be operated economically for such large sums. Total Energies is currently examining a possible return of the concession for one of the affected projects. At BP, a decision on how to proceed is still pending. The company says they are currently examining all options.

“If nothing is built for more than a year or two, there will be another break in the thread in the offshore industry,” says wind expert Dirk Briese, managing director of wind:research. The politically set expansion goals would be cut by more than 50 percent.

Companies criticize the planned amendment to the law

A tender for new areas originally planned for this year has been postponed because the federal government is revising the offshore wind energy law (WindSeeG) - the tender design is to be adjusted.

With the ongoing amendment, politics could give the industry a new perspective in times of crisis. The law could regulate that the areas that were auctioned for billions of dollars could be returned and reassigned as quickly as possible. In this way, the “thread break” could be avoided.

But the draft of the WindSeeG from Reich's ministry does not provide for this. Rather, it says: “A unilateral return of surcharges is still not planned.” This is intended to ensure the “binding nature of the tendering process”.

Energy

“Zombie projects”: Investors secured licenses for wind farms at sea – now they are hesitant

In a joint letter to the federal government, leading developers are now sharply criticizing the planned changes to the amendment to the law: “In its current economic situation, Germany cannot afford to let existing willingness to invest go unused through an unsuitable tender design,” it says. The document is available to the Handelsblatt. In addition to RWE, the Norwegian Equinor, the French EDF, the Spanish Iberdrola and the infrastructure investor CIP from Denmark are also among the signatories.

Among other things, they are calling for the introduction of contracts for difference for offshore tenders. A so-called Contract for Difference, or CfD for short, guarantees operators a fixed price for the electricity generated. This price is determined in an auction. If the market price is lower, the state makes up the difference; if it is higher, the state skims off the excess revenue.

However, in the new WindSeeG, CfDs only come into play if a first round without state protection is unsuccessful. If the law passes as planned, there is a risk of “repetitive industrial policy mistakes with serious consequences for the entire value chain,” warn the companies.

“From December 2027 the order books will be empty”

“By 2028 at the latest, the order situation is already looking bad for many suppliers,” says expert Briese. The first have already announced job cuts.

Like the EEW company. The Rostock-based company produces steel foundations for wind turbines on the high seas. According to media reports, it now has to lay off ten percent of its workforce due to a lack of orders. Around 100 positions are affected.

900 companies are active in the offshore wind energy sector across Germany

The situation is also serious at Steelwind from Nordenham: “From December 2027 the order books will be empty,” says Managing Director Korbinian Ott to the Handelsblatt. If things continue like this, the company will probably have to register short-time work for its 400 employees from 2028.

Almost 900 companies across Germany are active in the field of offshore wind energy. This doesn’t just include turbine builders and foundation manufacturers. Network operators such as 50Hertz, maintenance specialists such as Deutsche Windtechnik, drive technology companies such as Flender and logistics providers such as BLG and Rhenus are also active along the value chain. “This will have very noticeable consequences for all companies in the supply chain,” says Siemens Energy board member Philip.

This is particularly sensitive for the German coastal regions. Entire offshore centers have been formed in Rostock, Bremerhaven, Cuxhaven and Nordenham in recent years. If there are no new projects, this affects not only individual suppliers, but also a closely interwoven network of industry, trade, ports and service providers.

Will the fate of the German solar industry repeat itself?

This is exactly why managers warn against a development like that in the solar industry: The demand for clean electricity remains, but industrial value creation is shifting abroad. 15 years ago, the German solar industry was a global leader. There is hardly anything left of it now. Solar modules for the German market are now almost exclusively manufactured in China.

Chinese suppliers are already pushing into the offshore market. The manufacturer Dajin, for example, has been supplying so-called monopile foundations for offshore wind farms in Europe for years - they are produced exclusively in China. According to an analysis by the consulting firm Sinolytics, Dajin has recently become the largest supplier of foundations in the European offshore industry.

Related topics

GermanySiemensRWESiemens EnergyBPChina

While turbines from Chinese providers at sea are currently still taboo for many project developers for safety reasons, the reluctance to use cables, foundations and steel beams from abroad has long since disappeared - they have been increasingly installed by developers such as RWE and Orsted for years. The enormous cost pressure is likely to further exacerbate this trend in view of the crisis.

“If Germany slows down the expansion of offshore wind energy while international competition and import pressure increases, we will endanger our own industrial base,” says BWO Managing Director Stefan Thimm. There is a risk of the closure of plants that will be urgently needed in a few years. In the future, up to 80 percent of the components and services for German offshore wind projects would have to be imported.

More: China's offshore plans are reaching their limits in Europe - but for how long?

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